As COVID hits profits, can law firms make savings in HR and payroll?

HR manager
By Steve Cox | 7th December 2020 | 14 min read

More than eight in ten top law firms are concerned that COVID will stop them achieving their financial ambitions, a major survey of the legal sector by PWC found.

In fact, the accountancy firm’s research found there was already a squeeze on profitability and financial targets before the coronavirus crisis arrived.

What are the top priorities for legal practices?

The findings suggest that cost savings and efficiencies are a top priority for legal practices for the rest of 2020 and going into 2021.

The PWC report stated: “Whilst the financial performance of UK law firms has been impacted by COVID-19, further analysis underlines the fact that there was ongoing economic pressure in the legal sector prior to the pandemic.

“Our findings this year suggest that pressure on profitability exists more now than ever, with 42% of Top 100 firms reporting a fall in profits. This is up from 36% in 2019 and 30% in 2018.

“Whilst 70% of Top 100 law firms reported fee income growth this year, this is notably down on prior years (from 89% in 2019 and 84% in 2018), and absolute growth levels have reduced.”

The survey also uncovered a significant fall in both PEP and average chargeable hours.

Net profit margins fell again for the sixth year – this time from 35.5% to 33.8% (6.2% lower than 2014).

What can law firms do to be more efficient and make savings?

Optimising back-office functions may be a key focus for many law firms.

But where can they make those efficiencies without disrupting or adversely affecting performance?

Internal payroll and HR systems are ideal candidates for review in order to achieve the desired cost savings, while also boosting efficiency.

Partners may wish to review whether these areas fallen short in terms of the firm’s expectations for maximum efficiency and cost-effectiveness in the current climate.


Could payroll and HR offer efficiency savings?

Payroll and HR functions should offer potential savings in time and money. The significant admin burden associated with both could be substantially reduced with the right measures.

What about modernisation?

Beyond the bottom line cost-saving aspect, legal sector organisations may be seeking to modernise their HR and payroll processes – some of which may have quickly become outdated. The need to future-proof has been put into sharp focus by the pandemic.

By modernising now, law firms can more ably tackle the growing complexities of legislation in HR and payroll – not least furlough - and the broader challenges arising in the age of coronavirus.

The year 2020 has shown business leaders that in this ‘next normal’ it’s vital to ensure they’re ready for anything.

How can IRIS help?

Our IRIS Cascade HR software can save you a huge amount of time, money, and unnecessary effort by combining your HR and Payroll functions, in one seamlessly integrated package. For smaller companies, with up to 250 employees, check out our online HR software, IRIS HR Professional.

We’ve been making market-leading, fully compliant software for more than 40 years, with a rich pedigree in developing Payroll and HR solutions.

IRIS Cascade is an easy to use, online HR solution. It reduces the time you need to spend on admin, and offers bespoke reporting for law firms.

IRIS Fully Managed Payroll provides an option for law firms to make savings by outsourcing.

We have a range of HR and payroll solutions that can tailored to legal practices in the UK.

Want to learn more?

Call us on 0344 844 9644 or email